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US court rejects BP pay-out appeal

New Orleans court upholds ruling authorising businesses to seek compensation for the 2010 Gulf of Mexico oil spill.

Last updated: 04 Mar 2014 07:22
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The Deepwater Horizon drilling rig explosion triggered the worst oil spill in US history [EPA]

A US appeals court has rejected oil and gas giant BP's call to prevent businesses from seeking financial reparations for the 2010 Gulf of Mexico oil spill.

The Fifth US Circuit Court of Appeals in New Orleans upheld on Monday by a two to one vote a December 24 ruling by US District Judge Carl Barbier that authorised payments for so-called business economic loss claims.

It also said an injunction preventing payments should be lifted and claims can be made without proof of financial loss.

Today's ruling makes clear that BP can't rewrite the deal it agreed to.

Steve Herman and Jim Roy, Business claimants' lawyers in joint statement

"The settlement agreement does not require a claimant to submit evidence that the claim arose as a result of the oil spill," Circuit Judge Leslie Southwick wrote for the majority.

Terms of the settlement "are not as protective of BP's present concerns as might have been achievable, but they are the protections that were accepted by the parties and approved by the district court," Southwick added.

The court also said claims administrator Patrick Juneau could root out bogus claims without having to perform the "gatekeeping" function requested by BP.

Circuit Judge Edith Brown Clement disagreed, saying the court's decision wrongly helps claimants whose losses had "absolutely nothing to do with Deepwater Horizon or BP's conduct".

BP spokesman Geoff Morrell said the London-based oil company disagreed with Monday's decision, believing that the claimants were not "proper class members" under the settlement.

Done deal

Monday's decision is a setback in BP's effort to limit payments over the April 20, 2010 explosion of the Deepwater Horizon drilling rig and rupture of BP's Macondo oil well.

The disaster killed 11 people and triggered the largest offshore oil spill in US history.

Barbier had ruled in December that BP would have to honour its earlier interpretation of a multi-billion dollar settlement agreement over the spill whereby certain businesses were presumed to have suffered harm and could claim losses.

BP said this ruling would allow businesses to make fake claims.

Steve Herman and Jim Roy, who represent the business claimants, said in a joint statement that "today's ruling makes clear that BP can't rewrite the deal it agreed to".

BP originally projected its settlement with businesses and individuals harmed by the spill to cost $7.8bn, but as of February fourth, it had reassessed this estimate to $9.2bn.

And, as of Monday, about $3.84bn had been paid out to 42,272 claimants, according to Juneau's website.

BP is considering a further appeal.

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Source:
Reuters
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